U.S. Supreme Court health care ruling leaves Medicaid expansion up to individual states

In a defining moment in U.S. Supreme Court history, Chief Justice John Roberts joined the court’s liberal bloc Thursday to announce a 5-4 decision upholding the most hotly debated provision of President Barack Obama’s 2010 health care overhaul. To do so, the Roberts majority framed the requirement for all Americans to purchase health insurance, along with an IRS penalty for not complying, as a tax, not the argument the administration preferred but enough to leave in place the linchpin of the insurance market changes.

View full sizeDrew Broach, The Times-PicayuneProtesters take to the neutral ground on Veterans Memorial Boulevard in Metairie on the day of the U.S. Supreme Court's decision to uphold President Barack Obama's sweeping federal health care law.

Yet even as Roberts, a Republican appointee, crossed the court’s ideological divide on the individual mandate, he also led seven justices in striking down perhaps a wider-reaching component of the law that would have compelled the 50 states to oversee a significant expansion of the joint state-federal Medicaid insurance program for the poor. The expanded framework still stands, but participation will be up to individual states.

Justice Anthony Kennedy, who had been viewed as the most likely swing vote in the case, led the court’s conservative wing in a dissent that called for striking down the law in its entirety, from the mandate and the Medicaid expansion to hundreds of pilot programs, grants and popular provisions such as barring insurers from denying coverage for applicants with existing medical conditions.

The result is that the law stands, though it will continue as a political hot potato in an election year, to say nothing of the uncertain implementation of state-level health insurance exchanges and the now-voluntary Medicaid expansion.

The decision

Individual mandate upheld: Individuals must buy health insurance or pay an IRS penalty. The court ruled the requirement was a tax allowed by the Constitution. Chief Justice John Roberts wrote in the majority opinion: “The federal government does not have the power to order people to buy health insurance. ... The federal government does have the power to impose a tax on those without health insurance.”

Medicaid expansion mandate struck down: The provision in the law passed by Congress requiring states to extend Medicaid insurance to all households with incomes at or below 133 percent of the federal poverty rate or lose all federal Medicaid matching money was ruled an unconstitutional coercion of the states. State participation is voluntary under the ruling.

The rest: Other parts of the law, such as popular provisions that prohibit insurers from denying coverage for patients with pre-existing medical conditions and allow parents to keep their children up to age 26 on family policies, will continue.

The decision, announced before a packed courtroom with hundreds of news media, protesters and other observers surrounding the court’s white limestone edifice on Capitol Hill, ends two years of wrangling led by 26 state attorneys general, including Louisiana’s Buddy Caldwell, who asked that Obama’s signature legislative achievement be thrown out.

Obama, Romney weigh in

The president, in relatively muted tones, declared victory shortly after Roberts announced the decision. “I know there will be a lot of discussion today about the politics of all this, about who won and who lost,” the president said Thursday according to a White House transcript. “That’s how these things tend to be viewed here in Washington. But that discussion completely misses the point. Whatever the politics, today’s decision was a victory for people all over this country whose lives will be more secure because of this law and the Supreme Court’s decision to uphold it.”

His Republican rival Mitt Romney, meanwhile, also claimed a jolt of energy as he reprised the GOP call to “repeal and replace” the act. “What the court did today was say that Obamacare does not violate the Constitution,” Romney said. “What they did not do was say that Obamacare is good law or that it’s good policy. Obamacare was bad policy yesterday. It’s bad policy today. Obamacare was bad law yesterday. It’s bad law today.”

Both parties promise to use the issue to motivate their bases in the presidential race and in the battle for control of Congress. Republicans and their aligned interest groups, including the National Federation of Independent Business, seized immediately on the majority’s framing of the mandate and penalty as a tax. Statements from NFIB, an original plaintiff in challenging the law, said Obama has now broken his 2008 campaign promise not to raise taxes on the middle class.

Democrats, meanwhile, will continue to remind voters — including the GOP base that loathes the mandate — that the law is modeled after “Romneycare,” the Massachusetts law that Romney signed as governor. At the time, Romney championed the mandate as a way to spread risk to a wider pool of citizens while ending the ability of healthy Americans to use the system for catastrophic care without having paid premiums. Romney did not mention the Massachusetts law in his remarks, which he delivered with the U.S. Capitol in the background.

No ripples so far in Louisiana

In Louisiana, no immediate policy effects are obvious. Republican Gov. Bobby Jindal and Republican Insurance Commissioner Jim Donelon already have declined to create insurance exchanges that must launch by Jan. 1, 2014. Instead, that job will fall to the federal Department of Health and Human Services.

Louisiana reactions

"Come this November, we are going to elect a new president and a new Congress who will repeal and replace Obamacare. That’s why we have refused to implement the Obamacare health exchange or the Medicaid expansion.” -- Gov. Bobby Jindal, Republican

“The Supreme Court’s ruling today confirms what many people of goodwill believed all along: that Congress’ historic efforts to provide a more affordable and equitable system of health care for our nation is within its constitutional prerogatives. … I am proud of my work to make this law a reality. Its benefits are clear. It reduces the deficit by more than $1 trillion over 20 years, provides security to millions of middle class and low-income Americans who need and depend on affordable health care that now cannot be taken away, and over the long run, will improve health outcomes for our entire population. Now that the Supreme Court has made this clear by its ruling, it is the obligation of the states to fully implement and expedite the Affordable Care Act.” -- U.S. Sen. Mary Landrieu, Democrat

“I’m incredibly disappointed in the Supreme Court and its ruling to uphold the majority of Obamacare. I think it’s flat wrong and reflects a lot about how Washington believes it’s bigger than the rest of the country. … I am 100 percent committed to repealing Obamacare outright. No matter what the Supreme Court may believe, I think Obamacare has been proved a bad idea since its creation that’s actually making things worse. It continues to increase health care costs and puts the federal government squarely between patients and doctors.” -- U.S. Sen. David Vitter, Republican

“Today’s Supreme Court ruling is not just a victory for the Affordable Care Act, but a victory for millions of Americans and tens of thousands of New Orleanians. The ACA has had a huge local impact. … In New Orleans, access to primary care has and continues to increase through this legislation. This decision reaffirms support for expanding access through our preventative, primary care clinic network. … Today, the U.S. Supreme Court has ensured vital protections and benefits for our family, friends and neighbors who need them most.” -- New Orleans Mayor Mitch Landrieu, Democrat

“The U.S. Supreme Court’s decision to uphold a law that forces millions of Americans to buy insurance under a new federal health care act is deeply disappointing. We fought this battle to protect the freedom of American citizens from the overreach of the federal government and argued to halt this takeover of health care. Our position has always been that Congress does not have the authority to force Americans to buy insurance and that the act is an unprecedented intrusion into individual freedoms.” -- Attorney General Buddy Caldwell, Republican

“We respect the Supreme Court’s decision today to largely uphold the Affordable Care Act. Ochsner has already developed the type of modern health care delivery system that leading policymakers envision, and we are poised to implement and advance the goals of health care reform.” -- Dr. Pat Quinlan, Ochsner Health System CEO

“Blue Cross and Blue Shield of Louisiana has long been committed to ensuring everyone has high-quality, affordable health-care coverage. We will continue to implement the law while working with policymakers to fix provisions that will increase costs, such as the health insurance tax that will add hundreds of dollars to families’ premiums each year. On behalf of our 1.4 million members, we will continue to lead efforts in our local communities — partnering with doctors, nurses, hospitals and others — to rein in costs, improve quality, help people stay well and better manage their care when they need it.” -- Mike Reitz, Blue Cross and Blue Shield of Louisiana CEO

“While we’re certainly disappointed, NFIB respects the decision to uphold the individual mandate by the Supreme Court. Clearly, this mandate has now become a tax on all Americans and a broken campaign promise from President Obama not to raise taxes.” -- Renee Amar, National Federation of Independent Business of Louisiana

“With this decision, the Affordable Care Act is unambiguously the law of the land. Now is the time for Louisianans to come together and begin the work of implementing these important reforms that will benefit our state and all Louisianans tremendously.” -- Jan Moller, Louisiana Budget Project

In the tradition of previous chief justices such as Earl Warren, who wrote the famous Brown v. Board school desegregation case, Roberts wrote the prevailing opinion in the seminal case rather than assigning the task to associates.

To reach both outcomes, Roberts found a nuanced path that yields a mixed bag politically, legally and from a health policy perspective. He rejected out of hand the Obama administration’s primary argument in support of the individual mandate, siding with the challengers who argued that congressional authority to regulate interstate commerce does not extend to requiring the purchase of a specific product. By shifting the focus to taxing authority, the court avoided a decision that would change the long-held understanding of congressional authority to regulate commerce.

While conservatives feared an expansion of commerce clause authority, there had been musing among liberals that the court, by rejecting the administration’s commerce regulation arguments, could effectively roll back wide latitude that Congress has enjoyed since World War II.

Roberts’ decision acknowledged that Congress did not explicitly identify as a tax the IRS penalty for not purchasing insurance. But he noted court precedent that he said requires justices to explore every possible framing that might support the constitutionality of a law, with the burden on the challengers to prove a provision is not permissible. Democrats, who held majorities in both chambers of Congress in 2010, avoided the tax designation out of electoral considerations. Republicans at the time called the penalty a tax but shifted away from that argument during the legal wrangling.

Justices strike middle ground

Justices Elena Kagan and Stephen Breyer joined Roberts in his conclusions. Justices Ruth Bader Ginsburg wrote a separate opinion, with Justice Sonia Sotomayor joining, holding that the mandate is permissible under both the commerce clause and congressional taxing power.

On Medicaid, Roberts also found a middle ground and persuaded Kagan and Breyer. The law effectively raised income eligibility for the government insurance program to 133 percent of federal poverty level, a change that would affect dozens of states, including Louisiana, with lower thresholds. The law called for the federal government to pay most of the new costs, but it compelled states to participate or lose federal support for their existing Medicaid populations.

Roberts, Kagan and Breyer sided with challengers’ argument that pegging all federal Medicaid support to the new income requirements is an unconstitutional coercion, because it gives states no real choice. But they declined to go as far as the four absolute dissenters. Rather than toss out the expansion altogether, the Roberts allows a state to raise its income eligibility and receive the new federal support or opt out with no penalty.

As with their more expansive view of the mandate, Ginsburg and Sotomayor argued that Congress could require state participation. But they joined the Roberts contingent to form a majority on endorsing a voluntary program.